Predictions 2011: Melissa Francis On Energy

Wednesday, 1 Dec 2010 | 3:28 PM ETCNBC.com

SHARES

1. Crude oil will surge past $100.

Several reasons why this is a shoe-in. The weak dollar(See No. 2) is one. Even though the dollar gets a bounce from the safety trade, especially when investors are running from European default, the trend in the dollar is lower as we dig ourselves deeper into debt. Another reason is the fundamentals. As economiesaround the world recover, we'll keep gulping down that light sweet crude in greater quantities.

2. The dollar will sink.

Why? See No. 1. The trend lower is your friend. The only way this won't happen is if the Fed decides to abandon its plan to buy more Treasurys. Sure, it seems like madness for a government to issue debt and then print money to buy that same debt from itself. But there's a lot of pressure to abandon QE, and I doubt Ben Bernanke enjoys the bullying so he won't cave lightly.

3. Natural gas will sputter and lag the energy complex.

Nat gas fracking is all the rage. Hotter than those jean leggings that look good on almost no one. And we are already seeing the logical extension of that mania, a glut in supply (both in nat gas and unflattering legging-jeans). The more locals try to get rich by allowing fracking on their land, the more the price will fall. Nat gas will bring up the rear of the energy complex in 2011.

4. Gold rules.

Gold prices will set new record highs in 2011. I admit it, I trash talked this rally before jumping on board near $1,300 an ounce. (Better late than never.) The problem I have is that the fundamentals don't support it. See the great oil rally of 2008. Eventually all frenzied rallies come to an end—but not before making new highs.